The Business Dictionary defines a perishable as an ‘Article that can lose its usefulness and value if not appropriately stored or transported, or if not utilised within a certain period’.
Wikipedia defines distressed inventory as ‘inventory (goods and products) whose potential to be sold at a normal cost has passed or will soon pass’.
The terms are mostly associated with fresh produce - the product’s sell by date, the hotel industry in terms of bed nights and the airline industry for seats on planes. However, it can be applied to any product which will ‘go off’ and lose its value if it is not sold by a specific time and into which category the golf tee-off time fits perfectly.
The Turbine Boutique Hotel and Spa - Plettenberg Bay
One of any golf club’s most valuable resources will be its time sheets. Each individual time slot is just as prone to the ravages of time as fresh fruit, a hotel bed night and an airline seat, in that it will ‘go off’ in revenue generating terms and become of no value if not sold on or before its due date.
The rules of supply and demand have as much effect on the business of golf as in any other commercial environment.
The general consensus of opinion is that a standard golf course of 18 holes can accommodate just over 50 000 rounds per annum assuming a 6 day week and 180 rounds per day.
Allowing for events which will block off access to the golf course, but not result in a full field and when the course experiences closed days due to external factors i.e. unexpected maintenance, inclement or extreme weather conditions, this figure could be trimmed to a more conservative 42 000.
If we are to be even more conservative, then we could even reduce this figure further to 36 000 rounds because of longer tee off times’ intervals, or perhaps a club’s need to adopt a selectively commercial approach to visitor rounds and external events, such as corporate golf days and non-members tournaments, and restrict these so as to allow better access to the course for its members.
Whatever the annual benchmark chosen, the difference between the numbers of rounds that a course handles per annum and its benchmark figure will become rounds that are potentially distressed inventory.
This phenomenon was unheard of up until about a decade and half ago. Up to that point almost every golf course had a queue of players lining up to play on it, or trying to join it as members.
Wild Coast Sun Country Club. Photo by S Shewell - GolfVistaSA
Standing on a clubhouse terrace quite recently and looking across the beautiful late afternoon vistas presented by the golf course, which was sadly completely untroubled by any human presence, I was subjected to a ‘funny look’, by my much younger companion, when I mused that until quite recently this club had had a waiting list for membership.
The good old days! (Punch Magazine)
The reaction in many cases to this drop in membership and green fees’ revenues will be a knee jerk and one involving panic measures and the offer of discounted rounds and creative membership options to ‘get the numbers up’.
If going to the mattresses is the ‘go-to’ reaction to trouble in the movie The Godfather, then its equivalent in golf terms appears to be to discount rounds’ prices.
Given that most golf clubs’ revenues are already built on the dangerously narrow base of rounds and membership income, ‘discounting’ or meddling with either of these core revenue streams will be at best a ‘quick fix’. It is also an option that cannot hope to address the core reasons for the downturn and will most likely initiate a price war with other clubs in the area.
Over time (often a much shorter time than one might think) this will lead to a degradation of the club’s image and the inevitable cycle of now not having enough revenues from the reduced green fees and memberships to maintain the course and its facilities, as result of which rounds’ numbers and rounds’ revenues drop again and the downward spiral is then continued, compounded and accelerated.
There are a number of potential solutions to this challenge in the form of partnership with other golf courses in the region, reciprocity agreements, better revenue yields per round and more effective packaging.
All of these types of initiatives in conjunction with creative and innovative thinking around the development of new and fresh promotional and marketing products and programmes should enable clubs to find new sources of revenues, without resort to the cul-de-sac of discounting and price-cutting.
To be continued…
John Cockayne – Golf Editor.
The Business of Golf is a trading arm of Gold Palm Promotions cc. Event, Venue, Management & Marketing.
John Cockayne; Mobile; +27 (0) 73 896 7931. Email; firstname.lastname@example.org
Business Day feature – Better Travel Options for Golfers and Golf Clubs.
The contents of this document are confidential, may not be copied or activated without the express written permission of John Cockayne and remain the sole IP of the author.